BofA Securities downgraded PotlatchDeltic Corp. (NASDAQ: PCH) from Buy to Underperform and cut its price target to $46 from $49, citing continued weakness in the lumber and construction markets. Shares fell more than 1% in premarket trading Monday.

The firm said that while timber REITs like Potlatch and Weyerhaeuser had outperformed other wood and building materials companies earlier in 2025, lumber prices and construction demand were likely to remain subdued through the winter.

BofA added that it did not expect the Federal Reserve to cut rates until mid-2026, and pointed to risks from builder incentives and stagnant housing activity. The analysts also said lumber operating rates of 78-80% indicated an oversupplied market, limiting the impact of tariffs or duties on pricing.

While the firm acknowledged that Potlatch's land value supported its long-term asset base, it argued that valuations were not compelling on an operating cash flow basis given weak commodity pricing. BofA said Potlatch's next major catalyst—the closing of its planned merger with Rayonier—was unlikely to occur before late Q1 or early Q2 2026.

The firm's new $46 target reflected a lower target AFFO multiple of 16-20x, down by two turns from its prior estimate.